The Importance of Cross-Border Quality in a Globalised and Liberalised World Dr. Herbert-Michael Zapf President and CEO International Post Corporation PostEurop, Kiev, 4 September 2006

Globalisation of the Economies n New rule setters n The mature markets are shrinking n Tremendous technological and logistical progress The way globalisation works is different, not globalisation in itself

Liberalisation of the Postal Markets and Regulation n In the economic sense, the postal industry is not a network industry, but is regulated that way n The USO has lost its importance, though this is not recognised Greater need for cooperation between Postal operators because of liberalisation Increasing pressure on Postal operators

International Post Corporation n A cooperative association of 23 national Postal operators from North America, Europe and the Pacific n Our corporate mission is the provision of assistance and expertise to facilitate the development and improvement of postal services n IPC members deliver − More than 330 billion letters a year − Almost 4/5 th of the world’s mail volume

IPC’s Core Activities n Project management for quality of service improvement n Performance Centre n Support for postal operations: − Tray pool management − Operational surveys − Certification scheme for international mail processing centres n International customer service – Internet- based system linking call centres n REIMS / inter-Postal operator payments

IPC Performance Measures n Letters − UNEX end-to-end monitoring of cross-boarder letters − Test letters reflect real mail flows − RFID transponders track test letters at specific points in the mail pipeline − IPC systems calculate performance results and provide feedback to members

IPC Performance Measures n Bar-coded mail products: − Registered letters − Exprès letters − EMS − Parcels n Barcodes scanned at each point along the delivery pipeline n IPC systems calculate performance results and provide feedback to members

UNEX Europe Letters J+3 End-to-End OutboundIn b o u n d FR IS IE GB FIBEDE DKLU NL NO SE 1994 objective 80% GR IT ESPT

2005 objective 85% > 90% UNEX Europe Letters J+3 End-to-End  Outbound I n b o u n d 1994 AT BE CH ES DE DK FI FRGB IE IS IT LU NLNOPTSE

1994 objective 80% 2005 objective 85% > 90% UNEX Europe Letters J+3 End-to-End  Outbound I n b o u n d 1994 CY CZ HU EE LV LT MT PL RO SI SK

UNEX Europe-18 End-to-End Priority/First Class Letters J+1J+2J+3J+4J+5J+6J+7J+8J+9J+10 % Delivered EU Reliability Objective 97% EU Speed Objective 85% Cumulative Cumulative % more in 2 days than in 3 before 80% more by 2 nd day 5 day objective in 4 days Big drop in tail >J+3 31% to 6% >J+4 16% to 2% >J+5 8% to 1% Europe-29 93

Mathematics of Quality Collection 99% Sorting 95% Exchange Office 95%Airport & Airline 95% Exchange Office 95% Sorting 95% Delivery 95% 99% 94% 89% 85% 81% 77% 73%

Further Thoughts on Quality of Service n Cross border mail is a growing market n Customers do not complain; they move their business if the service and price are not right n Posts are a logistical network − Only as strong as the weakest link − High performance needed from all n Market liberalisation due 2009 in EU − Effect on states around EU n Tools and processes are available

IPC Tools for Service Improvement n Letters − Upgrading processes for target setting and monitoring achievement − UNEX measures for assessing progress − Tray pool operation − Transport network operation n Bar-coded mail products - projects − Registered & Exprès letters - PRIME − Parcels - EPG − Courier - EMS

IPC Cooperation with PostEurop n CAPERS (CAPE for Eastern Europe) − Electronic pre-advice and confirmation of receipt for receptacles in mail exchanges n UNEX − Measurement of letter service end-to-end and segment-level performance in UNEX Lite and from 2005 in full system n REIMS-EAST − Terminal dues in line with the EU postal directives − Quality of service link − Cost based

Complementary Capabilities n PostEurop − Wide membership − Restricted Union of UPU with access to Quality of Service Funds − Access to EU funding too n IPC − Centre of postal technical excellence − Quality of Service improvement track record − Running systems provide the tools n Location − Sharing same building with easy coordination

Conclusion n Globalisation and liberalisation n Pressure on Postal operators n Cooperation more important n Quality of service the key to success n Management of the whole quality process essential n Join us in UNEX and profit from the benefits of cooperation